Zimplow Holdings Limited, a diversified firm providing agricultural, mining, and infrastructural engineering equipment solutions, is taking steps to insulate itself against the negative impacts of El Niño-induced drought and declining mineral prices. These challenges are expected to affect the company’s bottom line in 2024.
Zimplow’s agricultural segment operates through Farmec, Valmec, and Mealie Brand business units, while its mining segment includes Tractive Power Solutions, Powermec, and CT Bolts. However, the anticipated drought and reduced global mineral prices are expected to lower agricultural output and revenues, leading companies in both segments to cut capital expenditures, affecting Zimplow’s contracts.
“The group is expected to face headwinds in FY2024 due to the El Niño-induced drought, the harsh economic operating environment, and the impact of soft mineral prices,” said Zimplow acting group CEO Willem Swan in the company’s 2023 annual report. “However, the group is insulating itself from these macroeconomic factors through factory capacitation, the launch of newly acquired OEM’s business turnaround, and group-wide cost containment measures.”
Zimplow is prioritizing its earthmoving and heavy equipment solutions in the mining and infrastructure segments to boost its income. Despite the challenging economic environment, the company followed through on several initiatives anchoring its current year’s strategy.
“Launch of the Valmec Division involved separating two leading tractor brands, Massey Ferguson and Valtra, to operate as two separate product offerings,” said Zimplow chairperson Godfrey Tsikayi Manhambara. “Valmec was established to propel the growth of the Valtra brand and offer alternative farm equipment and cost-effective aftersales solutions.”
The successful establishment of the Trentyre Harare branch also aimed to enhance customer experience through greater convenience. Despite these efforts, the group recorded a 29% reduction in revenue to $32 million in the year ending December 31, 2023, down from the previous year. This decline was partly due to its former earthmoving equipment firm, Barzem, not trading after the termination of its Caterpillar distributorship agreement in September 2022.
“The acquisition of Barloworld Equipment UK’s 49% shareholding in Barzem Enterprises (Pvt) Limited was completed, making Barzem a wholly-owned subsidiary from March 2024,” Zimplow stated. “This business unit will become a property holding company, with Tractive Power Solutions utilizing Barzem’s infrastructure.”
The late onset of summer rainfall in the 2023/4 cropping season also dampened demand in Zimplow’s agricultural cluster. Additionally, the economic headwinds led to a contraction in customer spending across the group.
Zimplow remains focused on overcoming these challenges through strategic measures and careful planning. By insulating itself against the impacts of El Niño and soft mineral prices, the company aims to maintain stability and continue providing quality solutions in the agricultural, mining, and infrastructure sectors.
Source: Newsday
